IDEAS home Printed from https://ideas.repec.org/p/ags/aaea13/150177.html
   My bibliography  Save this paper

Do Preferential Trade Policies (Actually) Increase Exports? An analysis of EU trade policies

Author

Listed:
  • Cipollina, Maria
  • Laborde, David
  • Salvatici, Luca

Abstract

Trade preferences have been used by the European Union and most developing countries can export with preferential market access under different schemes. We study the trade impact of these policies using highly disaggregated 8-digit data in a theoretically grounded gravity model framework. We provide an explicit measure of preferential tariff margins, using alternative definitions based on a comparison between bilateral applied tariffs and two different reference points: the MFN duty or a CES price aggregator. From a policy perspective, preferential schemes have a significant impact on volumes of trade, although with significant differences across sectors. From the methodological point of view, our results show that the definition of the margin has a significant impact on the assessment of the policy impact.

Suggested Citation

  • Cipollina, Maria & Laborde, David & Salvatici, Luca, 2013. "Do Preferential Trade Policies (Actually) Increase Exports? An analysis of EU trade policies," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150177, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:150177
    DOI: 10.22004/ag.econ.150177
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/150177/files/CipollinaLabordeSalvatici_conf_MPacc2.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.150177?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Miriam Manchin, 2006. "Preference Utilisation and Tariff Reduction in EU Imports from ACP Countries," The World Economy, Wiley Blackwell, vol. 29(9), pages 1243-1266, September.
    2. Angus Deaton, 2010. "Instruments, Randomization, and Learning about Development," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 424-455, June.
    3. Baldwin, Richard & Taglioni, Daria, 2006. "Gravity for Dummies and Dummies for Gravity Equations," CEPR Discussion Papers 5850, C.E.P.R. Discussion Papers.
    4. Prehn, Soren & Brümmer, Bernhard & Glauben, Thomas, 2012. "Structural Gravity Estimation & Agriculture," 2012: New Rules of Trade? December 2012, San Diego, California 142765, International Agricultural Trade Research Consortium.
    5. Martijn Burger & Frank van Oort & Gert-Jan Linders, 2009. "On the Specification of the Gravity Model of Trade: Zeros, Excess Zeros and Zero-inflated Estimation," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(2), pages 167-190.
    6. Guglielmo Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2009. "On the bilateral trade effects of free trade agreements between the EU-15 and the CEEC-4 countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 573-573, October.
    7. Xavier Cirera & Francesca Foliano & Michael Gasiorek, 2011. "The impact of GSP Preferences on Developing Countries' Exports in the European Union: Bilateral Gravity Modelling at the Product Level," Working Paper Series 2711, Department of Economics, University of Sussex Business School.
    8. Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
    9. Joseph Francois & Bernard Hoekman & Miriam Manchin, 2006. "Preference Erosion and Multilateral Trade Liberalization," The World Bank Economic Review, World Bank, vol. 20(2), pages 197-216.
    10. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    11. Huiwen Lai & Susan Chun Zhu, 2004. "The determinants of bilateral trade," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 459-483, May.
    12. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    13. Nouve, Kofi & Staatz, John M., 2003. "Has Agoa Increased Agricultural Exports From Sub-Saharan Africa To The United States?," Staff Paper Series 11573, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    14. James E. Anderson & Yoto V. Yotov, 2012. "Gold Standard Gravity," Boston College Working Papers in Economics 795, Boston College Department of Economics.
    15. Luca De Benedictis & Luca Salvatici (ed.), 2011. "The Trade Impact of European Union Preferential Policies," Springer Books, Springer, number 978-3-642-16564-1, June.
    16. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-481, August.
    17. Charlotte Emlinger & Florence Jacquet & Emmanuelle Chevassus Lozza, 2008. "Tariffs and other trade costs: assessing obstacles to Mediterranean countries' access to EU-15 fruit and vegetable markets," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(4), pages 409-438, December.
    18. Juan Ruiz & Josep M. Vilarrubia, 2007. "The wise use of dummies in gravity models: export potentials in the Euromed region," Working Papers 0720, Banco de España.
    19. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    20. Boriss Siliverstovs & Dieter Schumacher, 2009. "Estimating gravity equations: to log or not to log?," Empirical Economics, Springer, vol. 36(3), pages 645-669, June.
    21. Cardamone, Paola, 2007. "A Survey of the Assessments of the Effectiveness of Preferential Trade Agreements using Gravity Models," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 60(4), pages 421-473.
    22. Maria Cipollina & Luca Salvatici, 2010. "The trade impact of European Union agricultural preferences," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(1), pages 87-106.
    23. Jean‐Christophe Bureau & Raja Chakir & Jacques Gallezot, 2007. "The Utilisation of Trade Preferences for Developing Countries in the Agri‐food Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(2), pages 175-198, June.
    24. Robert C. Feenstra & Philip Luck & Maurice Obstfeld & Katheryn N. Russ, 2018. "In Search of the Armington Elasticity," The Review of Economics and Statistics, MIT Press, vol. 100(1), pages 135-150, March.
    25. Aiello, Francesco & Demaria, Federica, 2009. "Do trade preferential agreements enhance the exports of developing countries? Evidence from the EU GSP," MPRA Paper 20093, University Library of Munich, Germany.
    26. repec:hal:wpspec:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    27. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-153, February.
    28. Fugazza, Marco & Nicita, Alessandro, 2011. "Measuring preferential market access," MPRA Paper 38565, University Library of Munich, Germany.
    29. Boumellassa, Houssein & Debucquet, David Laborde & Mitaritonna, Cristina, 2009. "A picture of tariff protection across the World in 2004: MAcMap-HS6, Version 2," IFPRI discussion papers 903, International Food Policy Research Institute (IFPRI).
    30. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    31. Huiwen Lai & Daniel Trefler, 2002. "The Gains from Trade with Monopolistic Competition: Specification, Estimation, and Mis-Specification," NBER Working Papers 9169, National Bureau of Economic Research, Inc.
    32. Lars Nilsson, 2002. "Trading relations: is the roadmap from Lometo Cotonou correct?," Applied Economics, Taylor & Francis Journals, vol. 34(4), pages 439-452.
    33. Baldwin, Richard E. & Skudelny, Frauke & Taglioni, Daria, 2005. "Trade effects of the euro: evidence from sectoral data," Working Paper Series 446, European Central Bank.
    34. Ossa, Ralph, 2015. "Why trade matters after all," Journal of International Economics, Elsevier, vol. 97(2), pages 266-277.
    35. Katerina Gradeva & Inmaculada Martínez-Zarzoso, 2009. "Trade as Aid: The Role of the EBA-Trade Preferences Regime in the Development Strategy," Ibero America Institute for Econ. Research (IAI) Discussion Papers 197, Ibero-America Institute for Economic Research.
    36. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
    37. Martínez-Zarzoso, Inmaculada & Felicitas, Nowak-Lehmann D. & Horsewood, Nicholas, 2009. "Are regional trading agreements beneficial?: Static and dynamic panel gravity models," The North American Journal of Economics and Finance, Elsevier, vol. 20(1), pages 46-65, March.
    38. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eduardo Rodrigues Sanguinet & Augusto Mussi Alvim & Miguel Atienza, 2022. "Trade agreements and participation in global value chains: Empirical evidence from Latin America," The World Economy, Wiley Blackwell, vol. 45(3), pages 702-738, March.
    2. Xavier Cirera & Francesca Foliano & Michael Gasiorek, 2016. "The impact of preferences on developing countries’ exports to the European Union: bilateral gravity modelling at the product level," Empirical Economics, Springer, vol. 50(1), pages 59-102, February.
    3. Moses A. ERHI & David UMORU, 2018. "Econometric Analysis Of Differential Trade Preferences In The Economic Society Of West African Countries," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 3(1), pages 15-23.
    4. Jeremiás Máté Balogh & Nuno Carlos Leitão, 2019. "A gravity approach of agricultural trade: The nexus of the EU and African, Caribbean and Pacific countries," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 65(11), pages 509-519.
    5. Petr Polak & Nikol Polakova & Anna Tlusta, 2020. "How Bad Are Trade Wars? Evidence from Tariffs," Working Papers 2020/15, Czech National Bank.
    6. Demaria, Federica & Drogue, Sophie & Rau, Marie Luise, 2015. "EU preferences for agri-food products from developing countries- winning and losing due to the EU GSP reform 2013," 2015 Conference, August 9-14, 2015, Milan, Italy 211568, International Association of Agricultural Economists.
    7. Mesquita Moreira, Mauricio & Blyde, Juan & Giordano, Paolo & Rodriguez Chatruc, Marisol & Li, Kun & Harris, Jeremy & Lucenti, Krista, 2018. "Connecting the Dots: A Road Map for Better Integration in Latin America and the Caribbean," MPRA Paper 102289, University Library of Munich, Germany.
    8. Safet KURTOVIC & Blerim HALILI & Nehat MAXHUNI, 2017. "The effect of preferential tariffs of the EU: Some evidence from B&H," Journal of Economics and Political Economy, KSP Journals, vol. 4(3), pages 247-262, September.
    9. Braha, K. & Qineti, A. & Cupák, A. & Lazorčáková, E., 2017. "Determinants of Albanian Agricultural Export: The Gravity Model Approach," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 9(2), June.
    10. Khorana, Sangeeta & Caram, Santiago & Biagetti, Marco, 2021. "Developmental relevance of Everything but Arms: Implications for Bangladesh after LDC graduation," MPRA Paper 116258, University Library of Munich, Germany.
    11. Frederik Stender, 2018. "MERCOSUR in gravity: an accounting approach to analyzing its trade effects," International Economics and Economic Policy, Springer, vol. 15(2), pages 501-522, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maria Cipollina & David Laborde Debucquet & Luca Salvatici, 2017. "The tide that does not raise all boats: an assessment of EU preferential trade policies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(1), pages 199-231, February.
    2. Maria Cipollina & Federica Demaria, 2020. "The Trade Effect of the EU’s Preference Margins and Non-Tariff Barriers," JRFM, MDPI, vol. 13(9), pages 1-20, September.
    3. Frederik Stender, 2018. "MERCOSUR in gravity: an accounting approach to analyzing its trade effects," International Economics and Economic Policy, Springer, vol. 15(2), pages 501-522, April.
    4. Scott L. Baier & Amanda Kerr & Yoto V. Yotov, 2018. "Gravity, distance, and international trade," Chapters, in: Bruce A. Blonigen & Wesley W. Wilson (ed.), Handbook of International Trade and Transportation, chapter 2, pages 15-78, Edward Elgar Publishing.
    5. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    6. Tamaş Anca, 2020. "Why should the gravity model be taught in business education?," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 14(1), pages 422-433, July.
    7. Cipollina, Maria & Salvatici, Luca, 2007. "EU and developing countries: an analysis of preferential margins on agricultural trade flows," Working Papers 7219, TRADEAG - Agricultural Trade Agreements.
    8. Zongo, Amara, 2020. "The Impact of Services Trade Restrictiveness on Food Trade," MPRA Paper 101658, University Library of Munich, Germany.
    9. Hayakawa, Kazunobu & Yoshimi, Taiyo, 2016. "Gravity with multiple tariff schemes," IDE Discussion Papers 614, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    10. Valentina Raimondi & Margherita Scoppola & Alessandro Olper, 2012. "Preference erosion and the developing countries exports to the EU: a dynamic panel gravity approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(4), pages 707-732, December.
    11. Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci, 2013. "Are the EU trade preferences really effective? A Generalized Propensity Score evaluation of the Southern Mediterranean Countries' case in agriculture and fishery," Working Papers 2/13, Sapienza University of Rome, DISS.
    12. Valentina Raimondi & Margherita Scoppola & Alessandro Olper, 2012. "The Impact of European Union Preferential Policies in the Rice Industry: A Dynamic Panel Gravity Approach," FOODSECURE Working papers 4, LEI Wageningen UR.
    13. repec:hal:wpspec:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    14. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    15. Cooke, Edgar F. A., 2012. "Is the impact of AGOA heterogeneous?," MPRA Paper 43277, University Library of Munich, Germany.
    16. Xavier Cirera & Francesca Foliano & Michael Gasiorek, 2016. "The impact of preferences on developing countries’ exports to the European Union: bilateral gravity modelling at the product level," Empirical Economics, Springer, vol. 50(1), pages 59-102, February.
    17. repec:spo:wpecon:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    18. Zongo, Amara, 2021. "The impact of services trade restrictiveness on food trade," International Economics, Elsevier, vol. 166(C), pages 71-94.
    19. Maria Cipollina & Luca Salvatici, 2022. "The Dark Matter of Bilateral Preferential Margins: An Assessment of the Effect of US Tariffs," Sustainability, MDPI, vol. 14(8), pages 1-16, April.
    20. Bo Xiong & Sixia Chen, 2014. "Estimating gravity equation models in the presence of sample selection and heteroscedasticity," Applied Economics, Taylor & Francis Journals, vol. 46(24), pages 2993-3003, August.
    21. Estrella Gómez-Herrera, 2013. "Comparing alternative methods to estimate gravity models of bilateral trade," Empirical Economics, Springer, vol. 44(3), pages 1087-1111, June.
    22. repec:spo:wpmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    23. Pascal L. Ghazalian, 2019. "Canada's beef exports: Border effects and prospects for market access," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 67(1), pages 53-74, March.
    24. Shanping Yang & Inmaculada Martínez-Zarzoso, 2013. "A Panel Data Analysis of Trade Creation and Trade Diversion Effects: The case of ASEAN-China Free Trade Area (ACFTA)," Ibero America Institute for Econ. Research (IAI) Discussion Papers 224, Ibero-America Institute for Economic Research.

    More about this item

    Keywords

    Agricultural and Food Policy; International Relations/Trade;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea13:150177. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.